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Pearson Trading Statement

For discussion of the practicalities of setting up and operating income-portfolios which follow the HYP Group Guidelines. READ Guidelines before posting
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toofast2live
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Re: Pearson Trading Statement

#24098

Postby toofast2live » January 18th, 2017, 11:55 am

2016 earnings 57p. Say earnings stabilise at, say 50p (in line with company projections) could we expect a dividend of 25p? The trouble is is there any long term hope for this company given freeware, renting of books etc? I did hold but sold on the sale of the FT and Economoist stakes.

moorfield
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Re: Pearson Trading Statement

#24099

Postby moorfield » January 18th, 2017, 11:57 am

Arborbridge wrote:Here's an interesting point of discussion concerning SI! Does continuing to hold come under "vanilla ignorance of current facts" or does SI kick in since we cannot know what will happen two years out?


I don't hold, but once the rebased dividend is known I would recalculate and compare projected vs. target income for my whole HYP - this is my own mechanism for avoiding any don't-panic-capt-mainwairing reactions and looking objectively at whether I need to tinker or not. But certainly I would at least suspend top ups until the following year's annual accounts. I had to consider this in 2015 following the Centrica (CNA) rebased dividend but my target income was reached that year (only just) so no tinkering was done. Indeed Centrica (CNA) is now 2nd in my top up rankings.

Arborbridge
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Re: Pearson Trading Statement

#24107

Postby Arborbridge » January 18th, 2017, 12:14 pm

Holding a stock just because another manager does is a really bad reason.


That depends on the manager and how good your own stock picking is.

By the Way, due once more to the vagaries of the "quoting" system on TLF it looks like I was being quoted by Rob, whereas I wasn't.

It is a simply an extension of "the greater fool theory" and suggests zero confidence in a person's stock picking ability


Well, mine is not far from zero 8-) , which is why the HYP method has served me well for some of my income. For all else, I rely on IT managers who have, by and large, also served me well.

JMN2
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Re: Pearson Trading Statement

#24108

Postby JMN2 » January 18th, 2017, 12:15 pm

Sold today, should've done that earlier when they sold the FT. Sold also BHP Billiton then topped up LGEN and GFRD to median. Cash left over to wait for HMRC tax element next week to do final adjustments to portfolio. Onwards and upwards!

monabri
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Re: Pearson Trading Statement

#24114

Postby monabri » January 18th, 2017, 12:46 pm

Is it not worth taking a (SMALL) punt on this as a long term recovery?

This is on the premise that the SP has dropped 25% and the dividend might be cut to half of it's current sum (bearing in mind the H2 dividend will be paid) so the revised dividend might be 25p/565p or ~4.4%.

I'm not saying bet the house but a small "flutter" ...or should I just go and wash my mouth out with a bar of hyp_soap? :?

StepOne
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Re: Pearson Trading Statement

#24116

Postby StepOne » January 18th, 2017, 12:52 pm

monabri wrote:Is it not worth taking a (SMALL) punt on this as a long term recovery?


Maybe, but not as part of an HYP. I wouldn't buy now until the new dividend level is known, which will be at least a year away as they won't announce net year's final until Feb 2018.

StepOne

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Re: Pearson Trading Statement

#24117

Postby Arborbridge » January 18th, 2017, 1:02 pm

Is it not worth taking a (SMALL) punt on this as a long term recovery?

The problem I have with Pearson, is that I'm not convinced it is a long term recovery.

The second problem is that a small punt is not going to make any difference one way or the other, so it's hardly worth the bother!

Although my default attitude is "trust the management" I am appalled at the family silver which has been, and is going to be, sold off by Pearsons. And they seem to have fallen in to an elephant trap which might lead to the demise of the business rather than long term recovery. But, many people said that almost a year back, and that's when I should have reacted. As people said at the time: this isn't the company we all invested in years ago.

Arb.

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Re: Pearson Trading Statement

#24118

Postby kempiejon » January 18th, 2017, 1:10 pm

Well luckily I have a portfolio of high yielders, as I know I'll never be able to pick a selection that never reduce the dividend, still I'm comfortable this Pearson reduction will be insignificant when I total up my dividends for the next few years. Pearson was a buy for me 3 or 4 years ago and I was disheartened by the sales of FT and Economist, I thought they'd sold penguin too but perhaps not completed. Any redirection of business strategy is a risk and could take some time to adjust, seems like it's costing more and has been less successful than hoped. I doubt the management did this just to mess with my income, but it seems they're not doing the business for me just now, let's see if the long term change is OK. I'll continue to hold.

idpickering
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Re: Pearson Trading Statement

#24153

Postby idpickering » January 18th, 2017, 2:56 pm

ap8889 wrote:...my adherence to not selling even in the face of gathering bad omens has cost me a little today.


Much as I sympathise with your plight, it is worth remembering that you still hold 'x' number of shares of PSON. The loss would become a reality should you sell. At the moment, it's on paper/computer screen. This meant respectfully.

Ian.

OhNoNotimAgain
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Re: Pearson Trading Statement

#24166

Postby OhNoNotimAgain » January 18th, 2017, 3:53 pm


Arborbridge
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Re: Pearson Trading Statement

#24172

Postby Arborbridge » January 18th, 2017, 4:06 pm

Speaking at last year's Finsbury Growth & Income annual general meeting, Train apologised to shareholders for the losses made on Pearson, which he said were 'purely the result of my stubbornness and stupidity'.

He said he had come 'perilously close' to selling the stock, a rare move for a manager who runs concentrated portfolios and sells companies as infrequently as he buys them.



Ouch! Indeed. I wonder if he will be as stubborn this time round. In fact, will I??

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Re: Pearson Trading Statement

#24178

Postby Dod1010 » January 18th, 2017, 4:41 pm

Been out all day so I am a little late in replying to Rob's latest but he has illustrated my concerns over dividends pretty well. Oils, International banks, miners and drugs? Well they are mainly the ones, except possibly for the miners, where the dividend is mostly at risk I'd say, or at least where there seems little opportunity for much of an increase and if sterling strengthens again that could easily wipe out any increase, ergo I am concerned about increases in dividends this year.

As for following star managers, I never do that although a number here seem to.

Arb

I thought of going to the Finsbury AGM later this month but I do not think I can be bothered as it is being held about 400 miles away from me but I would like to hear Nick Train in person, not particularly on Pearson.

Dod

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Re: Pearson Trading Statement

#24180

Postby Itsallaguess » January 18th, 2017, 4:55 pm

A difficult reminder that these things are hard to avoid when investing across a number of companies, and one which I think tends towards justifying a larger number of HYP shares in ones portfolio than the often-touted 15, where of course such effects would be felt much more keenly than in a portfolio holding a larger number of constituents.

That said, as a holder of PSON I won't beat myself up too much, in a similar approach to the one where I didn't get too giddy earlier in the year when a few different HYP components did well on the income and capital front. These things often feel incredibly tough, especially when seeing share prices down 30% and a dividend re-rating on the cards, but I think it's important when we're affected by these situations that we keep an eye on the portfolio-level capital and income, as that's why we own a portfolio in the first place, to help lessen the effects of these types of situations.

Anyone who thinks they can avoid them completely is either kidding themselves, or has been incredibly lucky until now, or both!!

Cheers,

Itsallaguess

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Re: Pearson Trading Statement

#24198

Postby vrdiver » January 18th, 2017, 5:49 pm

I hold Pearson, and so have suffered the 30% capital hit (looking at Digitallook). I could sell now, but I suspect that a month or two will let the water settle and the bad news may be seen to have been overdone.

If the Rebased dividend is cut by 30%, then my portfolio yield won't have been affected, just the actual money it pays out :( If the cut is deeper, maybe the share price will bounce back as other investors think the management are grasping this nettle firmly at last? No idea, but my own personal trading history says to never ever sell on emotion, as I have always got it wrong that way.

So I'll continue to hold and watch what plays out. The good news for me is that I hold a larger-than-usually-accepted number of shares and PSON was underweight even so!

VRD

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Re: Pearson Trading Statement

#24201

Postby grimer » January 18th, 2017, 5:59 pm

For a twenty share, equally weighted, HYP this would equate to a 1.5% fall in capital values. Certainly a painful hit, if you need to sell, but diversification should have lessened the blow.

I did hold Pearson, but sold in March to transfer cash into my SIPP. A lucky escape in some ways, but NG and other HYP shares have seen a slow bleed of 30% since the summer. I think you need to try and look at the bigger picture and stay diversified.

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Re: Pearson Trading Statement

#24210

Postby tjh290633 » January 18th, 2017, 6:15 pm

Right, my portfolio has fallen by 0.27% on the day today, thanks to PSON. There is a 34p dividend to come, which at 573p is over 5%. So you sell now or before XD and you need to replace it with something to provide the dividend foregone. Meanwhile there may be a reaction to today's knees jerking, and the price may recover, to fall back at XD.

To my mind this is a classic case for doing nothing when the bad news comes out. If you want to sell, a better opportunity may well come along. If the dividend is halved, then the yield will still be 4.5% and there may be justification for switching into something with a decent yield that is more reliable.

Think before you act.

TJH

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Re: Pearson Trading Statement

#24219

Postby bluedonkey » January 18th, 2017, 6:38 pm

Portfolio. Diversification. Long term. Portfolio. Diversification. Long term.
And repeat.

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Re: Pearson Trading Statement

#24225

Postby monabri » January 18th, 2017, 6:51 pm

Only Liberum Capital called it !
Goldman Sachs view was 808p on 13 Jan 17.
Alphavalue view 986p today!!
Numis view 710p today
Investec 835p on 5th Jan.

It seems pointless looking at most broker's views!

Deev8
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Re: Pearson Trading Statement

#24311

Postby Deev8 » January 19th, 2017, 12:06 am

OhNoNotimAgain wrote:In any case it was established long ago that there was a low correlation between an economy and its stock market.

You don't happen to have a handy reference for that piece of research do you? I would be an interesting read.

Dave

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Re: Pearson Trading Statement

#24322

Postby Dod1010 » January 19th, 2017, 6:45 am

monabri wrote:Only Liberum Capital called it !
Goldman Sachs view was 808p on 13 Jan 17.
Alphavalue view 986p today!!
Numis view 710p today
Investec 835p on 5th Jan.

It seems pointless looking at most broker's views!


It is pointless looking at most broker's views. They know little more than you or I and for the most part it is not their money they are considering anyway. You need to look, think and act (even if 'act' means moving on to the next opportunity, that is, not buying) You need to decide for yourself and in order to do that you need to be in the market getting a feel for what is happening.

Dod


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